Educational Loan Information

Nearly every need-based financial aid award at St. Olaf includes student loans. Because we believe a college education is an investment in a student’s future, he or she should be willing to take on a reasonable amount of debt to assist with this investment. St. Olaf’s Financial Aid Office will review your eligibility for all types of aid including loans and offer you the most attractive loan programs available based on your financial need and the program funds available. Loans are the last type of aid for which you are considered (after grants, scholarships, and student employment). They are considered self-help financial aid because you must repay the money you borrow.

There are three main types of educational loans:

  1. Federal Direct Student Loans
  2. Federal Direct Parent PLUS Loans
  3. Student Alternative Loans

Students must complete the Free Application for Federal Student Aid (FAFSA) to be considered for federal student and parent loan programs.

If you are looking for additional financing options (after you have exhausted your federal loan eligibility), you may wish to consider a student alternative loan.

Federal Direct Loan Program

Federal Direct Student Loans are low-interest loans provided to students with capital provided by the federal government.  The Direct Loan may be offered as a Subsidized or an Unsubsidized Loan or a combination of both.  Repayment of the loan principal begins six months after the student graduates, withdraws, or enrollment drops below half-time status.

  • The Subsidized loan is a need-based loan and no interest accrues while the student is enrolled (at least half time) or during deferment periods. The annual interest rate on the Federal Direct Subsidized Loan for the 2023-24 Academic Year will be fixed at 5.49%. The interest rate for the 2022-23 Academic Year was fixed at 4.99%.
  • The Unsubsidized loan is not based on need and interest accrues while the student is in school.  It is the student’s responsibility to pay the interest as it accrues OR the student can choose to have the interest capitalized (added to the principal balance). The annual interest rate on the Federal Direct Unsubsidized Loan for the 2023-24 Academic Year will be fixed at 5.49%. The interest rate for the 2022-23 Academic Year was fixed at 4.99%.

The Direct Student Loan origination fee is 1.057% which is deducted from the loan at the time of disbursement. For example, if you are borrowing $1,000, only $990 will show up in your student account.

Direct loans are disbursed to the student’s account each term after all required documentation is received.  First-time borrowers must complete a Direct Loan Master Promissory Note (MPN) and Entrance Counseling at

The yearly amount students can borrow each year for Subsidized and Unsubsidized loans depends on their grade level and dependency status.

Dependent Student Federal Direct Loan Annual Limits

Class Year Maximum Subsidized Eligibility1 Additional Unsubsidized Eligibility2 Total Direct Loan Eligibility
Freshman $3,500 $2,000 $5,500
Sophomore $4,500 $2,000 $6,500
Junior $5,500 $2,000 $7,500
Senior $5,500 $2,000 $7,500

1. Eligibility for subsidy on the base amount is determined by the results of the FAFSA.
2. The total amount of Direct Loan is limited to cost of attendance minus other financial aid.

The aggregate (total) limit a dependent student may borrow for undergraduate attendance for all Subsidized and Unsubsidized federal loans is $31,000 (no more than $23,000 may be subsidized).

How to apply for your Federal Direct Subsidized/Unsubsidized Loans:

  1. Go to
  2. Click on the “Complete Aid Process” tab on the top of the screen
  3. After logging in with your information (including your FSA Username and Password),
    you will need to complete the Entrance Counseling and the
    Master Promissory Note (MPN) for the Subsidized/Unsubsidized Loans.
  4. The Federal Direct Student Loan documents are only completed once during your time at St Olaf.

Federal Direct Parent Loan (PLUS) Program

Federal Direct Parent PLUS Loans can be used by a parent to borrow on behalf of dependent undergraduates.  The parent borrower may be the student’s mother, father, or stepparent (if the stepparent’s income and assets were reported on the FAFSA) of the student.  While parents of all income levels are eligible to apply, a credit check is required and performed by the U.S. Department of Education.

Eligible parents may borrow up to the cost of attendance minus any other aid received by the student.

The interest rate for Direct PLUS Loans for the 2022-23 Academic Year is 8.05%. Interest is charged during all periods, beginning on the date of the loan’s first disbursement. The interest rate for the 2022-23 Academic Year was 7.54%.

PLUS Loans are also subject to a 4.228% origination fee which is deducted from the loan at the time of disbursement. For example, if you borrow $1,000, only $957.00 will show up in the student account.

For instructions on how to apply for a Parent PLUS loan, please click here.

Repayment begins within 60 days after the loan funds for the year are fully disbursed. Parent Direct PLUS Loan borrowers may have the option of deferring repayment.  Click Deferment Options for Parent Direct PLUS Loan Borrowers for more information.

Student Alternative Loan

Unlike federal loans, student alternative (or private) loans are non-federal educational loans offered through private lenders typically issued in the student’s name and requiring a credit-worthy co-signer. Alternative loans have variable and fixed rate options. Interest rates are based on credit scores. Some alternative loans may require interest payments while you are in school, have more fees, and less flexible repayment options than federal loans. These loans vary in terms, conditions, and eligibility requirements. You should carefully evaluate the criteria for each private loan program to determine the one that best meets your unique needs and situation.

St. Olaf College is not affiliated with any private lenders and does not suggest nor endorse lenders – students may choose any lender who offers alternative educational loans for students who attend St. Olaf. We offer a student alternative loan lender selection tool, FASTChoice, compiled of lenders that other St. Olaf students have utilized in the past 3-5 years. Again, you are welcome to choose any lender you wish. Here is a more comprehensive list of Student Alternative Loans that may offer additional options. The lender selection tool will provide you with information on each loan product in a way that helps you understand and compare them.

Federal Perkins Loan


The U.S. Congress ended the Federal Perkins Loan program on September 30, 2017.